Standard Cost Card

Inputs Standard Quantity

Direct materials 1.8
Direct labor 0.90
Variable manufacturing overhead 0.90

Actual results:
Actual output 12,000

Actual Quantity
Actual direct materials cost 1.80
Actual direct labor cost 0.92
Actual variable manufacturing overhead cost 0.92

Standard Cost Variance Analysis–Direct Materials

Actual Quantity of Input, at Actual Price 21,600
Actual Quantity of Input, at Standard Price 21,600
Standard Quantity Allowed for the Actual Output, at Standard Price 21,600
NO. 1-A Direct materials variances:
Materials price variance $6,480
Materials quantity variance $0
Materials spending variance $6,480

Standard Cost Variance Analysis–Direct Labor

Actual Hours of Input, at Actual Rate 11,040
Actual Hours of Input, at Standard Rate 11,040
Standard Hours Allowed for the Actual Output, at Standard Rate 10,800
NO. 1-B Direct labor variances:
Labor rate variance $5,520
Labor efficiency variance $4,320
Labor spending variance $1,200

Standard Cost Variance Analysis–Variable Manufacturing Overhead

Actual Hours of Input, at Actual Rate 11,040
Actual Hours of Input, at Standard Rate 11,040
Standard Hours Allowed for the Actual Output, at Standard Rate 10,800
NO. 1-C Variable overhead variances:
Variable overhead rate variance $5,520
Variable overhead efficiency variance $1,200
Variable overhead spending variance $4,320
 Problem 13

Standard Quantity Standard Price NO. 2

feet per unit $3.00 per foot
hours per unit $18.00 per hour
hours per unit $5.00 per hour

units

Actual Quantity Actual price

feet per unit $3.30 per foot
hours per unit $17.50 per hour
hours per unit $4.50 per hour
NO. 3

feet × $3.30 per foot = $71,280

feet × $3.00 per foot = $64,800
feet × $3.00 per foot = $64,800

hours × $17.50 per hour = $193,200

hours × $18.00 per hour = $198,720 NO. 4
hours × $18.00 per hour = $194,400

F
U
F

hours × $4.50 per hour = $49,680

hours × $5.00 per hour = $55,200
hours × $5.00 per hour = $54,000

F
U
F
Traceable amount of the excess in each of the variances:
Direct Materials:
Materials price variance $0.54 U
Materials quantity variance $0.00 $0.54 U
Direct Labor:
Labor rate variance $0.46 F
Labor efficiency variance $0.36 U $0.10 F
Variable Overhead:
Variable overhead rate variance $0.46 F
Variable overhead efficiency variance $0.10 U $0.36 F
Excess of actual cost over standard cost per unit $0.08 U

Traceable amount of the excess apparent to inefficient use of labor time:

Labor efficiency variance $0.36 U
Variable overhead efficiency variance $0.10 U
Total amount attributable to labor inefficiency $0.46 U

Amount attributable to other variances:

Excess of actual over standard cost per unit $0.08 U
Less: Total amount attributable to labor inefficiency $0.46 U
Total amount attributable to other variances $0.38 F

In summary, if only the labor time was efficiently used, the variances
for the month would have resulted in a favorable variance of $0.38
instead of an unfavorable variance of $0.08.

No, even though the $0.08 excess cost is well within the 2%
limit set by the company for acceptable variances when we look
closer into the details, there is a large material price variance
that will require further investigation.

Further, when we traced back the source of the excess, Direct

Material Variance takes the biggest part on it with $0.54
Unfavorable variance per unit.
Also, there is an unfavorable labor inefficiency variance of
$4,320 and an unfavorable variable efficiency variance of
$1,200. These two variances signal that idle time may be
present resulting in an increase in labor hours. Thus, the
company should look into opportunities that will improve their
efficiency.